Minnesota Student Association resolves tax situation

Minnesota Student Association was fined more than $10,000 for improperly filing tax returns.

by Cody Nelson


After failing to fulfill federal tax obligations for two years, the Minnesota Student Association has received an abatement for non-compliance fines.

The student association didn’t file its tax returns correctly for fiscal years 2009 and 2010, resulting in more than $10,800 in fines.

Tax-exempt groups like MSA aren’t required to pay organizational taxes, said Internal Revenue Service spokeswoman Karen Connelly, but do have to file compliance returns.

MSA applied for and received the abatement — a complete refund of the fines it paid plus interest — but its tax issues could affect its upcoming funding request.

For 2012-13, MSA received nearly $160,000 from student services fees, which provide the majority of MSA’s funding.

The Student Services Fees Committee, which allocates fee money to groups, may take the MSA’s tax situation into account in terms of “mismanagement of funding” when making appropriations this spring, said Rebecca Doepke, former SSFC member.

Because this year’s MSA administration addressed the tax problems, Doepke said the fees committee may make a recommendation that MSA put a policy in place to ensure this issue doesn’t happen again.

MSA is already implementing provisions to make its financial processes more organized and transparent, said MSA President Taylor Williams.

These changes include a standardization of forms and changes to reimbursement so the group could “hold up” to an audit, Williams said.

There were “rumors” of these tax errors beginning in spring 2012, Williams said, stemming from a series of letters from the IRS.

When the IRS fines became evident last summer, Williams and MSA Chief Financial Officer Derek Lunde worked together to properly file the overdue taxes.

During this process, Williams said they found this wasn’t the first time MSA hadn’t filed tax returns.

He said similar incidents happened about every 10 years.

Lunde said past MSA administrations only filed miscellaneous forms for paying independent contractors.

But the informational return required as a nonprofit was never filed with the IRS.

Some student groups have been unaware of their tax obligations and failed to meet the requirement, said Megan Sweet, SSFC adviser.

“I think what [Williams and Lunde] have done this year to rectify this situation and to ensure it doesn’t happen again is impressive,” she said.

Sweet said the fees committee takes tax issues and the steps taken to resolve problems into account but said she doesn’t know how it will affect funding recommendations.

“I can’t predict how the fees committee will review this information or how it will affect their funding request,” she said.

Lunde said tax issues aren’t unique to MSA and that this type of problem has to do with the constant turnover in student group leadership.

“I think it has to do a lot with the nature of student organizations,” he said. “We just have a little more money.”

Lunde said he doesn’t think the IRS fines will affect the SSFC’s funding recommendations because the situation was resolved and MSA was transparent about the process.

After initially paying the entirety of the fines, MSA didn’t plan to receive an abatement in its budget.

There are several ideas of how to spend the money, Williams said, but further discussions will determine exactly how the funds are used.